55 Performance Review Dear Shareholders, I am delighted to report that despite the difficult market conditions and prevailing challenges we faced in 2016, MISC once again proved its mettle by turning in commendable financial and operational performance. Adapting quickly to flagging market conditions in the energy shipping and offshore Oil & Gas segments, we proactively took steps to streamline and bolster our businesses in line with our new MISC2020 strategy. Even as we laid down the foundations to pursue renewed growth, we began to emerge a stronger, more resilient Group. Today, we continue to press forward in a confident but measured manner to achieve our MISC2020 aspirations, driven by our ambition of “moving energy to build a better world”. +18.1% Total Assets RM 2,228.8 million Operating Profit POSITIVE DEVELOPMENTS AMIDST PREVAILING CHALLENGES The year 2016 saw the global shipping industry undergoing another volatile year with players across the sector having to contend with muted trade growth, market volatility and pressures on already slim operating margins. This was aggravated further by the continued low oil price environment and surplus supply coming on-stream. Businesses across the Oil & Gas supply chain were affected by these developments to varying degrees. Major producers and refiners felt the pressure of lower oil prices and high operating costs most severely, while other players benefited significantly from the changes. In 2016, the petroleum and product sh i pp i ng sec t o r s f aced a mo re challenging operating environment than the previous year, with earnings across all sectors declining compared to 2015. However, earnings for crude tankers were healthy enough for MISC to remain in the black and focus on growth and development. Meanwhile, in the clean petroleum products and chemical shipping space, MISC faced strong headwinds as these sectors underwent challenges in a poor market environment which affected almost all owners and operators. In line with the Group’s overall business strategy and growth plans, we continued to implement several significant structural changes to bolster our Petroleum and Product Shipping segment under AET as well as to spread our reach across diverse market segments. The year saw us completing the transfer of ownership of MISC‘s chemical carriers to AET to create a comprehensive products shipping division. This has resulted in an enlarged products fleet that now has the capability to offer enhanced capacity and flexibility to customers who require clean vessels.
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